Results: SiteOne Landscape Supply, Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates
It's been a good week for SiteOne Landscape Supply, Inc. (NYSE:SITE) shareholders, because the company has just released its latest annual results, and the shares gained 9.6% to US$114. SiteOne Landscape Supply reported US$2.4b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$1.82 beat expectations, being 7.0% higher than what analysts expected. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
View our latest analysis for SiteOne Landscape Supply
Taking into account the latest results, the current consensus from SiteOne Landscape Supply's eight analysts is for revenues of US$2.59b in 2020, which would reflect a meaningful 9.9% increase on its sales over the past 12 months. Statutory earnings per share are expected to increase 8.8% to US$2.05. Before this earnings report, analysts had been forecasting revenues of US$2.53b and earnings per share (EPS) of US$2.11 in 2020. So it's pretty clear consensus is mixed on SiteOne Landscape Supply after the latest results; while analysts lifted revenue numbers, they also administered a minor downgrade to per-share earnings expectations.
Analysts also upgraded SiteOne Landscape Supply's price target 17% to US$103, implying that the higher sales are expected to generate enough value to offset the forecast decline in earnings. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values SiteOne Landscape Supply at US$125 per share, while the most bearish prices it at US$78.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await SiteOne Landscape Supply shareholders.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that SiteOne Landscape Supply's revenue growth is expected to slow, with forecast 9.9% increase next year well below the historical 13%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 4.4% next year. Even after the forecast slowdown in growth, it seems obvious that analysts still thinkSiteOne Landscape Supply will grow faster than the wider market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for SiteOne Landscape Supply. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider market. Analysts also upgraded their price target, suggesting that analysts believe the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple SiteOne Landscape Supply analysts - going out to 2024, and you can see them free on our platform here.
It might also be worth considering whether SiteOne Landscape Supply's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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